But optimists believe the correction provides a good entry point, hailing Monday’s nearly 6 percent jump in the blue-chip CSI300 Index as the start of a new wave of buying.

“Short-term adjustment is natural,” said Wen Xunneng, a Shanghai-based hedge fund manager. “We’re at the starting point of a bull market.”

The CSI300 index moved roughly 1 percent on either side before settling down 1.2 percent lower at 3,684.69 points, while the Shanghai Composite Index fell 0.7 percent to 2,941.52. The CSI300’s rise on Monday was its biggest one-day gain in three years.

Trading turnover totalled 1.07 trillion yuan ($160 billion), exceeding Monday’s 1.04 trillion yuan and the highest level in more than three years.

After a mauling in 2018, China stocks have surged about 20 percent so far this year, driven by a combination of factors including progress in Sino-U.S. trade talks, Beijing’s monetary easing to prop up the slowing economy and foreign money inflows.

Pan added that a deal between the two countries could potentially make China more competitive in the long run, by speeding up domestic reforms.

U.S. President Donald Trump said on Monday negotiators were “very, very close” to a deal. But Trump also sounded a note of caution, saying a deal “could happen fairly soon, or it might not happen at all.”

There are signs risk appetite is rapidly improving, with some investors scrambling to buy stocks for fear of missing out on the rally.

Outstanding margin financing business at brokerages has been climbing steadily this month, while investors have also been borrowing money in the grey market to buy equities, drawing the attention of regulators.

“We’re starting to see more investors buying stocks on margin,” said Yang Hai, analyst at Kaiyuan Securities. “It’s difficult for regulators to manage people’s greed.

Meanwhile, there are signs some investors are starting to take profits.

Foreign investors on Monday sold a net of 715 million yuan worth of A-shares via the stock connects linking mainland China and Hong Kong, snapping 18 trading days of net buying which helped power the Shanghai composite index to a more than eight-month high.

“Although an agreement to end the trade war with the U.S. would be good news for China, we doubt that it would prevent the country’s economy from weakening further,” it wrote on Tuesday.

Bank of America Merrill Lynch said it doesn’t consider conditions are ready for a bull market, but wrote: “based on the buoyant market sentiment and the past trading pattern, there is a decent chance that the market may enjoy some more upside over the next few months.

Financial firms, in particular banking stocks, led the declines on Tuesday after Beijing ordered banks and insurers to sharply step up lending to private firms, which are considered higher credit risks.